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International Journal of Business and Management Invention

ISSN (Online): 2319 8028, ISSN (Print): 2319 801X


www.ijbmi.org || Volume 6 Issue 5 || May. 2017 || PP13-18

Global Production And Sourcing :- The Case Of Gardenia


Bakery In South East Asia
Mohd Hasri Mohd Sedali
Master Of Business Administration Student, University Of Sultan Azlan Shah, Perak, Malaysia.

Abstract: In this case study, we will focus about the global production and sourcing of Gardenia
company businesses in South East Asia. Global production is the process of converting or transforming
resources from all over the world into good and services. Resource include material, machines,
employees, time and technology. The output of the production process may be manufactured goods as we
highlight in this case of Gardenia Bakery. Gardenia Bakery is core in producing bread which daily
consumed by people everyday. (Fariza Hashim, 2010)The process of global production is corcened with
operational activities from materials are required until the finished goods or services being manufactured
and transported. Other concepts related to global operations include global supply chain, global
sourcing, global manufacturing and global logistic. All these activities are conducted all over the world.
Thus, these activities need to be properly intergrated and coordinated to ensure the efficiency of the
operation. In this article review we will analyze about the global production and sourcing implemented
by Gardenia Bakery in South East Asia from beginning of the production to finish process until
transporting and distributing the product.
Keywords: Global Production, Resource, Global supply chain, Global Sourcing, Global Manuf acturing,
Global Logistic.

I. INTRODUCTION
COMPANY BACKGROUND
Gardenia originally was founded by an American named Horatio Scy Slocumm, an employee of International
Executive Service Corps. Mr slocumm who had 35 years of baking experinces together with Americas leading
chain of bakeries. Gardenia was born succesfully after 45 years of hardship.

Gardenia in Malaysia
(gardenia.com.my/aboutus)Gardenia Bakeries (KL) Sdn. Bhd. (GBKL) is a subsidiary of a food listed
company , QAF Ltd, who also operates Gardenia Singapore, Gardenia Philipines and will soon opening
Gardenia bakery in Fujian, China. Gardenia Bakeries (K.L) Sdn Bhd is a baked food producer in Shah Alam,
Selangor. The organization is located at Lot 3 Jalan Pelabur 23/1. This private company was founded in 1985
(about 32 years ago). Gardenia produced the first loaf of bread in year 1986. Gardenia becomes the leader in the
bakery market with an outstanding 99% brand recall rate and 80% top-mind-recall within 4 years. The
organization generates $198M in estimated sales as thier revenue per year. Gardenia Bakeries (K.L) Sdn Bhd
employs 2,500 people. In Shah Alam, the median number of employees at a company ranges from 30 to 495,
meaning that slightly more people work at Gardenia Bakeries (K.L) Sdn Bhd than at the average company.

Gardenia in Singapore
(gardenia.com.sg/aboutus)Gardenia Bakeries in Singapore was starting as a small business. It is only an
in store bakery in Singapore. Fortunately, due to their high demands and market share, they had opened a
commercial bakery at Pandan Loop. A commercial bakery was finally started in March 1983 at Pandan Loop,
producing 2000 loaves per hour. Originally based on the concept of a central bakery supplying a variety of
products mainly to retail bakeries, this changed to a single-minded concentration on producing a white sandwich
loaf distributed to all retail outlets including supermarkets and sundry shops. Launched against entrenched
competition; but with a superior product (softer-textured, tastier-flavoured and enriched bread), modern
distinctive packaging and good marketing (effective advertising, merchandising and distribution),Gardenia
bread gradually gained popularity. Its merits of being baked fresh, using the finest ingredients and delivered
fresh made it the most popular brand of packaged bread in Singapore within two years.A second bakery in
Singapore was set up in June 1993, with a production capacity of 8,000 loaves an hour.

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Global Production And Sourcing :- The Case Of Gardenia Bakery In South East Asia

Gardenia in Philipines
(gardenia.com.ph/aboutus)Gardenia started operating in thePhilippines in 1997, QAF Limited through
Gardenia international (Singapore) Pte Ltd established Gardenia Bakeries (Philippines), Inc. and started
construction of its bakery plant in the Laguna international Park (LIIP) in Binan, Laguna. In 2011, Gardenia
Bakeries Philippines opened a new manufacturing plant in Cebu with a daily capacity of 50,000 loaves in order
to serve the Visayas and Mindanao regions. This allowed the company to further improve its distribution across
the country as it used to concentrate solely on Metro Manila. The decision to invest in other factories to expand
its geographical reach and enter unexploited locations will result in Gardenia Bakeries Philippines maintaining
its leading position in baked goods in 2011.

GLOBAL SUPPLY CHAIN


Global supply chain management is a very important concept nowadays as it cover full set of business activities.
The coordination of materials, informations, and funds from the initial raw material supplier to the ultimate
customer must be encompasses by company supply chain.

Raw Material
(Gardenia Bakeries Philipines Business Analysis, 2016)Food processing is a methods or techniques
used to transform raw material into forms for human or animals consumption which utilize by food industry.
Food processing take clean, harvested or slaughtered and butchered product and uses it to produce marketable
food product. In the Gardenia bread products, the ingredients used in thier bread are sourced only from certified
suppliers with high standards of food safety assurance programmes, and these are subject to incoming quality
inspections and tests to ensure that they conform to Gardenias quality and safety specifications. Gardenia is a
food processing which transformed from raw material (Flour) to final product (bread). Gardenia Bakeries
Philippines inc. (GBPI) are using import milk only from particular countries such as USA, Australia and New
Zealand. Gardenia only uses premium ingredients from all over the world that under strictly checking and
testing to ensure the high-quality and safe bread product. In Malaysia, Padi Beras Nasional Bhd was the main
supplier of flour to Gardenia Malaysia which associated with Bernas Malaysia whose also the part of rice
supplier in Malaysia.

Inventory Management
Gardenia Bread are baked fresh daily so that consumers get the finest quality and freshest bread
daily.Usually bread are sold till the inventory is empty, however for unsold bread, they would be sold to
commercial fishponds and factory workers in Philipines. Gardenia need to do so in order to maintain its
reputation of ensuring its bread is fresh etc. In Malaysia, Gardenia has been actively involved in charitable
causes. (Ch'ng, 2012)Everyday, Gardenia will delivers complimentary fresh bread to over 61 charitable
organizations like old folks homes, orphanages and centers for disable person. This is the part of thier inventory
management and collabirate with Corporate Social Responsibility where there are specific portion of breads
will contribute to this society.

Distribution
Gardenia Philippines pioneered a unique distribution system, ensuring that only fresh breads reach
consumers every day. Gardenia strictly follows its international policy of keeping only fresh stocks on the store
shelves.(swordicer) As soon as products come out of the factory, delivery vans leave the production plant as
early as 4 oclock in the morning to bring the products to specific locations in the country. Replacing unsold
breads in store shelves with only freshly baked top-quality products during each day of delivery is a Gardenia
practice unmatched in the industry.Currently, Gardenia bread, which is widely distributed in entire Luzon, is the
leader in Metro Manila with a market share of more than 65% based on Nielsen retail data.
Also, the company covers the Western part of Visayas including Mindoro, Panay and Negros islands
and Eastern part of the Visayas serving the major islands of Samar and Leyte by utilizing the countrys Roll-On
Roll-Off (RORO) nautical highway through its fleet of company-owned feeder trucks. (Inquirer, 2015)Gardenia
Philipines aimed to expand thier coverage and make Gardenia breads easily accessible and available to all
consumers in that country. Gardenias Marketing and Sales Manager Nestor Constancia declared that they are
now serving the bread requirements to Cebu, Bohol, Cagayan de Oro, Malaybalay, Butuan, Iligan and Davao.
The Gardenias unique distribution system will utilize a new fleet of feeder trucks and delivery vans within
these cities.
Another practice unique to Gardenia is the G-lock system. An integral part of Gardenias quality
control system, this resealable clip is color-coded to indicate the day that the bread is baked for. It also contains
all of its vital information such as the Best Before date, the plant that baked the bread, a production code, and
the suggested retail price. The G-lock has a specific color for a particular day to let the consumer know when the

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Global Production And Sourcing :- The Case Of Gardenia Bakery In South East Asia

bread is delivered instead of just when it will expire. The corresponding G-lock colors with its delivery day are
as follows: Tan (Monday), Orange (Tuesday), Yellow (Wednesday), Blue (Thursday), Green (Friday), Red
(Saturday), and White (Sunday).
An efficient and effective distribution system is very important especially for companies dealing with
food products.Therefore, Gardenia has to ensure that it is able to deliver the freshly baked bread quickly and
efficiently every morning to some 3000 retail outlets in Singapore come rain or shine so that the bread remains
fresh when it reaches the stores. Gardenia is able to do so with its efficient sales and delivery teams. Since
Gardenia bread are available in many different places and thus it is easily accessible, by increasing the visibility
of Gardenia products, it will increases the convenient for consumers to buy Gardenia products and thus boosting
the sales of its product.
This method of distribution also implemented by Gardenia Malaysia as follows thier business policy of
Gardenia Bakery. Gardenia is the only bread manufacturer with a unique distribution system. Gardenia Malaysia
also using the Roll-On-Roll-Off (RO-RO) shipping network system. It delivers bread every day, seven days a
week, to ensure that consumer get the most freshness bread whenever to be consume. All unsold bread item will
be take out and replaced with newly baked ones during every single delivery. It is to make sure the standard of
bread.

Technology
In Malaysia, Gardenia has sustained its phenomenal growth and dominance through its distinctive
bread-making technique and philosophy. The traditional sponge and dough method is employed to bake every
single loaf of Gardenia bread. This bread-making technique allows the dough to develop naturally, giving it the
unique Gardenia texture and flavour as well as naturally increasing its shelf life. Each loaf, from the initial
mixing of ingredients to the final wrapping, takes approximately eight hours. The results attest to the old saying
of taking ones time to do things right, a soft and delicious sandwich bread favoured by Malaysians. Gardenias
insistence on supreme factory hygiene coupled with natural replacements such as raisin juice concentrate and
vinegar made it possible for Gardenia to produce bread with No Artificial, Synthetic and Unnatural
Preservatives for the Malaysian consumer.(Tahir, 2004) Leveraging on its brand strength, Gardenia also
produces a variety of other tasty bread products to satisfy consumers demands. Amongst its popular items are
Gardenia European Cottage Style bread, Toastem and Delicia loaves and convenient snacks such as Squiggles,
Delicia Cream Rolls, Delicia Sambal Bilis Bun, Delicia Waffles, Twiggies and Quick Bites snack cakes and its
range of spread.
(Lifestyle, 2016)Gardenia Philipines has just introducing the new P1-billion facility that can produce
up to 6,000 loaves per hour or a total of 150,000 loaves per day, equivalent to a 50 percent increase on its
current production capacity. The new plant located at Laguna International Industrial Park in Bian, Laguna
features additional robotics and the latest available technology in modern baking which came from the best
baking suppliers from all over the world such as Germany, the Netherlands, United States and Japan. Breads
from Gardenia are completely untouched by human hands, with the whole plant computer-controlled starting
from ingredient handling and makeup systems. The use of robotics in handling baking pans and a unique
technology in the de-panning process which promises to be gentler to the bread. The facilities also include a
tumbler where all four sides of the loaf are checked, while a tornado cleaner ensures that all baking pans are
very clean and free of crumbs.
(Cruz, 2009)The new facility features advanced equipment that adheres to globally-accepted baking
industry standards. Its advanced dough making and proofing system ensures the right structure and consistency
in the texture of breads. It uses one of the worlds most technologically-advanced and environment-friendly
large-scale ovens that can utilize compressed natural gas as an alternative to LPG. Environment-friendly
liquefied petroleum gas will continue to be used by the new oven baking system, which will eventually take in
compressed natural gas once it is made available in the industrial market. The new, state-of-the-art bread
manufacturing plant is capable of making 6,000 loaves of bread per hour or nearly 150,000 loaves per day,
almost doubling its production capability.
The new plants increased capacity enables the bread-manufacturing giant to deliver more freshly-
baked breads to more households, marking another milestone for the company since it began operating in the
country. A new pan handling system that uses robotic pan-feeding and stacking equipment allows the baking
pans to be stored automatically and vice-versa.
The new plant also adheres to current Good Manufacturing Practices (cGMP), and follows the highest globally-
accepted food quality and safety standards through the International Organization for Standardization (ISO) and
Hazard Analysis and Critical Control Points (HACCP).

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Global Production And Sourcing :- The Case Of Gardenia Bakery In South East Asia

Gardenias Bread Processing


There are 3 steps which follow by Gardenia bakeries food processing company.
1. Input
High quality control team has set up by Gardenia in order to ensure that all ingredients and raw material are
freshness and with best quality. From selecting to purchasing, they are strictest checking and specification the
quality of product and finest ingredients. Gardenia has using Just-in-time system in purchase raw material.
Therefore, they are very efficient in inventory control.
2. Process
Gardenia using new facility features advance equipment that as globally-accepted baking industry standard in
processing. It produces baked bread following a unique process. The whole operation of bread making is closely
monitored by quality controllers with trained. They inspection the whole process ensure quality breads are
delivered to the market. Other than that, controllers are responsible to ensure that every loaf produced is in best
quality and meets customer expectations.
3. Automatic blending
The production process starts with a Computerized system control. Begin blending of the right amount of
quality ingredients required. This helps to makes sure equal goodness of every loaf.
4. Production of sponge mix
The specially formulated Gardenia enriched flour, purified water, yeast, vitamins and minerals are added
together to form the sponge which released into a trough.
5. Fermentation room
The sponge dough is then kept in a fermentation room, under controlled temperature and humidity.
Fermentation process helps develop a unique Gardenia bread texture, aroma and taste.
6. Production of dough mix
At this stage, the sponge is mixed again with other ingredients t form the dough.
7. Divider
The dough is then divided into the standard weight for each particular loaf and conveyed to a rounder and
checkweigher
8. Intermediate proofer
The dough is then left to rest in the intermediate proofer for 10 minutes then just being moulded and placed into
the baking pans.
9. Final proofer
At this final proofer stage, the yeast is allowed to rise further under controlled temperature and humidity. Once
the dough has risen to the desired height, it is ready for baking.
10. Tunnel oven
Gardenia breads are baked for about 20 minutes at a temperature around 200 degrees Celsius in the state-of-the
art tunnel oven.

11. Automatic slicer & bagger


The bread to be kept in cooler for about an hour. After that ready to be sliced and pack. Gardenia
packaging mechanically before they are automatically sealed with kwil-logs tags that are printed with the use-by
dates.Gardenia delight's unique packaging. It is in an unconventional way which colourful packaging is
displayed in an upright position. Besides that, Gardenia was use the G-lock in its packaging. G-lock is a clip that
locks the Gardenia bread tightly in its package, sealing in the freshness and makes sure the bread retains its
flavour, aroma, and softness. The making Process as below:

12. Output
After all process has been done, it comes to step 3 which is output. All raw materials have turned to final
product which sellable. The company sells its product at supermarket, groceries, convenience, and variety
stores.

Gardenia Competitive Advantage


The competitive advantages required to be capabilities and hard to be duplicate by competitor.
Gardenia having lots competitive advantages which adding the strength and capabilities. Gardenia have a
competitive advantage in terms of tangible resources, physical, modern plant facilities, manufacturing located
which near with good water supply, JIT inventory control system, technological, State-of-the- art manufacturing
machinery and equipment, untouched by human hands from beginning to end of the process, innovative and
unique production processes, Patents, copyrights, trademarks, organizational, effective strategic planning with
international processes, effective and efficiency evaluation and excellent control system, intangible resources,
human, experience and high productivity employees, capabilities employees, believe on people key of success,

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Global Production And Sourcing :- The Case Of Gardenia Bakery In South East Asia

excellent managerial skills, innovation and creativity reputation, good brand name, reputation in between
customer for quality and reliability, reputation in between supplier, organisational capabilities, ,provide
outstanding customer services, high quality product development capabilities and ability hire right people in
right position and motivate them.

Gardenia International
As today's global marketplace, Gardenia realised the importance of raising the quality of goods and
services. Bread is an essential food item in the markets whereby operate by Gardenia. It proves by the sales
whereby the top bread seller and do not expect any significant drop in demand. Gardenia international won the
top place in the list of the Fastest 50 companies in Singapore in 2008. By international quality ensuring,
Gardenia refer to high quality management practices across the country. Through a global network, Gardenia
takes advantages in differences of countries' economic and technological capabilities.

International environment Condition


In order to expanding Gardenia, many issues require to identify. International environment consists four major
categories: socio-cultural, political-legal, economic, and educational. Gardenia emphasizes long term orientation
and closes coordination with suppliers as well as work closely with human resources and commitment with
employees. Gardenia is strictly examined their quality strategies and practising.
Below is the outline of Dimension of international environment and quality control management for Gardenia.
1. Environment condition
2. Information and analysis
3. Human resource development and management
4. Management quality
5. Leadership and strategic quality planning
6. Quality and operational results
7. Customer focus and satisfaction

International Sales Subsidiary


Gardenia established first in Singapore, after the development, it expand to broader such as example
Malaysia, Philippine, Thailand and so on. Gardenia owes an overseas manufacturing plant. They invest in plant,
machinery and labour in the over sea market. For example, new unveil plants was been developed in Philippine.
It is able increasing the producing and as well as ensuring quality product. Gardenia is continuing get know the
local market and be able to produce suitable products and services to the needs of local customer. As example,
the taste of food for Filipino consumer is more to savoury. Therefore, Gardenia is changing the formulation of
product and produce product which accept by consumer.

Challenging in international market of Gardenia


Gardenia leading packaged sandwich Loaf Company in Singapore, Malaysia and the Philippines. It had
capturing at least 75 per cent of market share in these three countries. Gardenia moved according consumer
demands over the years. Over the years, Gardenia apparent focus on their nutritional information and
commitment to quality baked goods in order to growth. Gardenia global bakery arm- Gardenia International, a
group of bakery companies in Malaysia, Philippines and Australia and Bonjour Bakery in Singapore- Leads the
pack in this year's Fastest Growing awards.
(QAF, 2005)Gardenia Foods (S) Pte Ltd, wholly owned Gardenia Singapore maintained its top position
in the Singapore branded bread market. However faced increased competition in 2005 with a proliferation of
new products from existing players as well as the entry of new competitors. Sales were also affected negatively
by the price sensitivity of a segment of consumer who switched thier purchases toward the low priced large
loaves. Despite these challanges, Gardenia maintained its top leadership position by releasing several new
product and by launching a succesful new branding campaign.
To cater to the growing healthy lifestyle market, Gardenia Singapore launched the Hi Calcium Milk
Bread in April 2005. With the high calcium content, this product has become the obvious choice for health-
consious individuals and families. Actractively priced and marketed as the branded loaf with the highest
calcium content, this aromatic and soft loaf has boosted Gardenias white bread market share.
Gardenia is keep go beyond just offering their 'core-product', the sandwich loaf. In 2004, Gardenia
international bought over sole proprietorship called Baker Masion which specialised in par-baked goods. It is
challenging for Gardenia international turn the business focusing from producing just ' ready-for-consumption'
packaged bread loaves for those retail market. Recently, Gardenia International's sales in Australia have
doubled. A high opportunity for Gardenia International goes beyond the high competitive industry.

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Global Production And Sourcing :- The Case Of Gardenia Bakery In South East Asia

II. CONCLUSION
Gardenia today is already the market leader on baking industry in different countries likeSingapore,
Malaysia, Thailand and Philippines. Today, Gardenia is thelargest and leading manufacturing company of bread
in the South East Asia.Gardeniaalready created a top of mind awareness to everyone. Along with a mission to
serve consumers with the best quality assortment of great-tasting bakery with world-class
manufacturingfacilities and an efficient nationwide distribution network, thereby providing a fair returnon
shareholder investments. Gardenia also become the premier company in the baking industry and therelated food
and beverage industry, known and emulated for our best quality productsthat delight the consumer.
It is the pride of every employee, investor, trade partner and stakeholder. Having an efficient network
and modern technology they want to give people variety of high-qualitybread products. Gardenia wants to
satisfy their stakeholders and also its shareholders.Moreover, Gardenia also wants to be in the top of the minds
of people. Gardenia wants toposition in peoples mind that they are the best in the baking industry.In
makingdecisions and operation they always think of its customers first. Gardenia wants toachieve their mission
and vision with integrity, excellence, innovation and with theirteamwork, professionalism and stewardship.

BIBLIOGRAPHY
[1]. (n.d.). Retrieved from gardenia.com.my/aboutus: www.gardenia.com.my
[2]. (n.d.). Retrieved from gardenia.com.sg/aboutus.
[3]. (n.d.). Retrieved from gardenia.com.ph/aboutus.
[4]. Gardenia.com.my. (2004). Retrieved from Gardenia.com.my.
[5]. Gardenia Bakeries Philipines Business Analysis. (2016, June 14).
[6]. Ch'ng, B. (2012, May 18). Gardenia opens new factory.
[7]. Cruz, R. D. (2009, November 16). Gardenia unveils new plant, sees brighter future.
[8]. Fariza Hashim, A. R. (2010). International Business. Shah Alam: Oxford University Press.
[9]. Gardenia.com.sg. (n.d.).
[10]. Inquirer, P. D. (2015, April 25). Gardenia sets 50% hike in bread output.
[11]. Lifestyle, M. S. (2016, January 24). Gardenia boosts production capacity with P-1 billion plant.
[12]. QAF. (2005). QAF annual report. Singapore: QAF Ltd.
[13]. swordicer. (n.d.). Business and Management. Gardenia SCM Analysis, 6.
[14]. Tahir, S. (2004, September 18). Gardenia expects sales to reach RM300mil this year.

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